Business, 17.04.2021 17:40, zayzay162

Today is period 0, and the length between the periods is one year. In the fixed-income securities market you observe following three securities. An investor can buy or sell fraction of a fixed-income security. Security A: It is a zero-coupon bond. It matures in period 1, and it has a face value of $100. It can be bought or issued at a current price of $X.

Security B: It is a zero-coupon bond. It matures in period 2, and it has a face value of $1,000. It can be bought or issued at a current price of $860.71.

Security C: It is a forward contract. The contract matures on period 1, and the forward price is $92.312. The security underlying the forward contract matures on period 2 with a face value of $100. You may go short (sell) or long (buy) on this contract. [Hint: At t=0 if you buy a forward contract, then you will pay $92.312 at the end of year 1 (t=1), and then you will receive $100 at the end of year 2 (t=2).]

Assuming that Security B and Security C are priced correctly in the market. Then, as per you under the no-arbitrage principle, what should be the fundamental value of Security A, i. e., what is X?

[Round-off to at least four decimal places.]

Answers: 2

Show answers

Other questions on the subject: Business

Business, 21.06.2019 19:30, qiuedhg

Consumer surplus is: the difference between the price of a product and what consumers were willing to pay for the product. the difference between the discounted price of a product and its retail price. the difference between the price paid by consumers and the price required of producers. the difference between the price of a product and consumers' valuation of the last unit of the product purchased.

Answers: 2

continue

Business, 21.06.2019 21:00, lavishbre12

Roi analysis using dupont model. charlie? s furniture store has been in business for several years. the firm? s owners have described the store as a ? high-price, highservice? operation that provides lots of assistance to its customers. margin has averaged a relatively high 32% per year for several years, but turnover has been a relatively low 0.4 based on average total assets of $800,000. a discount furniture store is about to open in the area served by charlie? s, and management is considering lowering prices in order to compete effectively. required: a. calculate current sales and roi for charlie? s furniture store. b. assuming that the new strategy would reduce margin to 20%, and assuming that average total assets would stay the same, calculate the sales that would be required to have the same roi as they currently earned. c. suppose that you presented the results of your analysis in parts a and b of this problem to charlie, and he replied, ? what

Answers: 1

continue

Business, 22.06.2019 05:00, and7393

Xie company identified the following activities, costs, and activity drivers for 2017. the company manufactures two types of go-karts: deluxe and basic. activity expected costs expected activity handling materials $ 625,000 100,000 parts inspecting product 900,000 1,500 batches processing purchase orders 105,000 700 orders paying suppliers 175,000 500 invoices insuring the factory 300,000 40,000 square feet designing packaging 75,000 2 models required: 1. compute a single plantwide overhead rate, assuming that the company assigns overhead based on 125,000 budgeted direct labor hours. 2. in january 2017, the deluxe model required 2,500 direct labor hours and the basic model required 6,000 direct labor hours. assign overhead costs to each model using the single plantwide overhead rate.

Answers: 3

continue

Business, 22.06.2019 06:00, Tayj91

Why might a business based on a fad be a good idea? question 2 options: fads bring in the most customers. some fads are longer lasting than expected. fads have made some business owners incredibly wealthy. fads can take a business in a new direction.

Answers: 2

continue

Do you know the correct answer?

Today is period 0, and the length between the periods is one year. In the fixed-income securities ma...